Emerging-market-style turmoil in the UK

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While a number of specific issues have been affecting investor risk appetite over the past week – the UK’s fiscal policy stance, the radical right’s election victory in Italy and the troop mobilisation in Russia – the fundamental reason why risky assets have continued to slide is the Fed’s hawkish stance. Last week’s FOMC hammered home the message from Jackson Hole that the policy rate will rise more and will remain high for longer.

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